Health Care Reform Brings Caution and Aggressive Pricing in Medical Malpractice Insurance
With Health Care Reform in full swing, Insurance Carriers are making moves to retain premium.
I have noticed in reading the Industry Newsletter- Crittenden the ‘talk’ seems to be more about retaining and holding rather than aggressively ‘going after new’ business. Certainly, with our agency focus on providing advice in the areas of Risk and Practice Management, our Carrier (The Doctors’ Company) is discounting rates and providing a retirement return of premium benefit that is rewarding policyholder loyalty, the environment is overwhelmingly in the direction of retention of business and building and sustaining insurance relationships.
The reasons range from a gradual increase in the expense cost of claims,(increased ‘severity’, to uncertainty in the ‘market’ for physicians and facilities and a consolidation of Insurance Carriers in the Medical Malpractice Niche.
A moderation of loss years and the aggressive, competitive pricing within the segment will keep the companies from increasing the rates, in spite of the desire to adjust upward. With the release of reserves, moderation of losses and still an abundance of capital in the market, rates will remain low and discounts deep.
Stability is the same as an increase:
The industry has seen so many years of rate cuts, that rate stability is a sign that the ‘soft’ reducing premium markets are coming to an end: albeit a slow end.
From Medical Mutual in Maine to Texas Medical Liability Trust, to Copic in Colorado, the rate renewals for medical malpractice will be flat. As is often the case, the rate stability comes often after Departments of Insurance order rate reductions for medical malpractice insurance; reasoning that the carriers were all making substantial profits:
In California, The Department ordered Norcal Mutual and The Doctors’ Company both lower premiums by 7 %. We have all (we, being the medical malpractice carriers in the Northwest region) have lowered premiums and now we are left to hope that the low rates can sustain loss ratios and provide continuing stability.
Looking at Dentists as a Harbinger of things to come:
Again, citing Crittenden as a source of so much valuable information about the land scape of healthcare liability, we learn that Dentist Carriers are raising rates and underwriting more carefully. The result is that dentists with loss histories and those doing primarily aesthetic surfaces will see their policies rated up and possibly moved to nonstandard programs. Professional Underwriters Liability Insurance Company is an outstanding option for Dentists specializing in expanded features to grow their practices, dentists with medical negligence claims, or medical board claims.
Standard insurance carriers providing medical malpractice to dentists raised premiums during the last year as losses crept up slightly. Traditionally, the Carriers were able to price dentists slightly below actuarial market prices because they could make up what they needed to pay for individual losses with a volume of dentists. Volume pricing works when you have a growing pool of insureds.
Now, many of them are going to pushed out of these standard/preferred markets as the companies experience a disassembling of their book. As Dentists indicate that their practices include aesthetic or risky procedures, outside of the general dentistry services, standard underwriting guidelines will see them placed with substandard or nonstandard, surplus lines (read: more expensive) Carriers.
Dentists providing Botox, Fillers or Surgical Procedures will be priced as surplus lines providers, just a percentage above the standard pricing. This effect will leave some dentists and ancillary midlevel providers priced higher and perhaps looking for alternative solutions for medical malpractice insurance.
Solutions Solutions to Non Standard Dentists:
The Solution for Dentists who are being charged much more to cover the Cosmetic, Aesthetic portion of their practice may be to think outside the box, …to bifurcate the risk and place with two carriers. You can often purchase two policies for less than the cost of one.
The Doctors’ Insurance Agency has many specialty insurance markets to manage the aesthetic ‘spa’ portion of the practice, laser, fillers, etc. And to find a competitive nonstandard option.
We have helped Plastic Surgeons, Emergency Medical Physicians, Anesthesiologists and other specialties to maintain their Medical Spa and Aesthetic Practices, cover them completely including employees and medical group entity names, separating the risk from their medical or dental practice and save them annual premium.
Whether it is a nonstandard risk, a non-renewal of your medical malpractice insurance, or just providing more insurance coverage for your changing practice, The Doctors’ Insurance Agency can find a solution, competitively priced, placed with a strong, reserved proper insurance company.